The Hydrogen Experiment

The
Hydrogen Experiment

Riding
from the airport to Iceland's capital, Reykjavík, gives one the sensation of
having landed on the moon. Black lava rocks cover the mostly barren landscape,
which is articulated by craters, hills, and mountains. Other parts of the
island are covered by a thin layer of green moss. American astronauts traveled
here in the 1960s to practice walking the lunar surface, defining rock types,
and taking specimens.

I, too, have
traveled here on a journey of sorts to a new world-a world that is powered not
by oil, coal, and other polluting fossil fuels, but one that relies primarily
on renewable resources for energy and on hydrogen as an energy carrier,
producing electricity with only water and heat as byproducts. My quest has
brought me to the cluttered office of Bragi Árnason, a chemistry professor at
the University of Iceland whose 30-year-old plan to run his country on hydrogen
energy has recently become an official objective of his government, to be
achieved over the next 30 years. "I think we could be a pilot country, giving a
vision of the world to come," he says to me with a quiet conviction and deep,
blue-
-eyed stare that reminds me of this country's hardy Viking past.

When he first
proposed this hydrogen economy decades ago, many thought he was crazy. But
today, "Professor Hydrogen," as he has been nicknamed, is something of a
national hero. And Iceland is now his 39,000-square-mile lab space for at long
last conducting his ambitious experiment. Already, his scientific research has
led to a multi-million-dollar hydrogen venture between his university, his
government, other Iceland institutions, and a number of major multinational
corporations.

I am not alone in
my expedition to ground zero of the hydrogen economy: hundreds of scientists,
politicians, investors, and journalists have visited over the past year to
learn more about Iceland's plans. My journey is also an echo of what happened
in the 18th century, when merchants and officials flocked to another North
Atlantic island-Great Britain-to witness the harnessing of coal.

Today, many experts
are watching Iceland closely as a "planetary laboratory" for the anticipated
global energy transition from an economy based predominantly on finite fossil
fuels to one fueled by virtually unlimited renewable resources and hydrogen,
the most abundant element in the universe. The way this energy transition
unfolds over the coming decades will be greatly influenced by choices made
today. How will the hydrogen be produced? How will it be transported? How will
it be stored and used? Iceland is facing these choices right now, and in
plotting its course has reached a fork in the road. It must choose between
developing an interim system that produces and delivers methanol, from which hydrogen
can be later extracted, or developing a full infrastructure for directly
transporting and using hydrogen. Whether the country tests incremental
improvements or more ambitious steps will have important economic and
environmental implications, not only for Iceland but for other countries hoping
to draw conclusions from its experiment.

Iceland is not
undertaking this experiment in isolation. Its hydrogen strategy is tied to
three major global trends. The first of these is growing concern over the
future supply and price of oil-already a heavy burden on the Icelandic economy.
The second is the recent revolution in bringing hydrogen-powered fuel
cells-used for decades in space travel-down to earth, making Árnason's vision
far more economically feasible than it was just ten years ago. The third is the
accelerating worldwide movement to combat climate change by reducing carbon
emissions from fossil fuel burning, which in its current configuration places
constraints on Iceland that make a hydrogen transition particularly palatable.
How the island's plans proceed will both help to shape and be shaped by these
broader international developments.

A Head Start

Straddling the
mid-Atlantic continental ridge, Iceland is a geologist's dream. Providing
inspiration for Jules Verne's Journey to the Center of the Earth, the island's
volcanoes have accounted for an estimated one-third of Earth's lava output
since 1500 a.d. Eruptions have
featured prominently in Icelandic religion and history, at times wiping out
large parts of the population. Reykjavík is the only city I know that has a
museum devoted solely to volcanoes. There, one can find out the latest about
the 150 volcanoes that remain active today.

Iceland's volcanic
activity is accompanied by other geological processes. Earthquakes are
frequent, though usually mild, which has made natives rather blasé about them.
Also common are volcanically heated regions of hot water and steam, most
visible in the hot springs and geysers scattered across the island. In fact,
the word "geyser" originated here, derived from geysir, and Reykjavík
translates to "smoky bay." During my visit, the well-known Geysir, which erupts
higher than the United States' Old Faithful, was reemerging from years of
dormancy, to the delight of Icelanders everywhere.

The country first
began to tap its geothermal energy for heating homes and other buildings (also
called district heating) in the 1940s. Today, 90 percent of the country's
buildings-and all of the capital's-are heated with geothermal water. Several
towns in the countryside use geothermal heat to run greenhouses for
horticulture, and geothermal steam is also widely harnessed for power
generation. One tourist hotspot, the Blue Lagoon bathing resort, is supplied by
the warm, silicate-rich excess water from the nearby Reykjanes geothermal power
station. Yet it is estimated that only 1 percent of the country's geothermal
energy potential has been utilized.

Falling water is
another abundant energy source here. Although it was floating ice floes that
inspired an early (but departing) settler to christen the island Iceland, the
country's high latitude has exposed it to a series of ice ages. This icy legacy
lingers today in the form of sizable glaciers, including Europe's largest,
which have carved deep valleys with breathtaking waterfalls and powerful
rivers. The first stream was harnessed for hydroelectricity in the 1900s. The
country aggressively expanded its hydro capacity after declaring independence
from Denmark in the 1940s, beginning an era of economic growth that elevated it
from Third World status to one of the world's most wealthy nations today.
Hydroelectricity currently provides 19 percent of Iceland's energy-and that
share could be significantly increased, as the country has harnessed only 15 percent
of potential resources (though many regions are unlikely to be tapped, due to
their natural beauty, ecological fragility, and historical significance).

Iceland is unique
among modern nations in having an electricity system that is already 99.9
percent reliant on indigenous renewable energy-geothermal and hydroelectric.
The overall energy system, including transportation, is roughly 68 percent
dependent on renewable sources. This, some experts believe, prepares the
country well to make the transition from internal combustion engines to fuel
cells, and from hydrocarbon to hydrogen energy. With its extensive renewable
energy grid, Iceland has a headstart on the rest of the world, and is
positioned to blaze the path to an economy free of fossil fuels.

Peat and Petroleum

When Vikings first
permanently settled Iceland in the 9th century a.d.,
they used bushy birchwood and peat reservoirs to make fires for cooking and
heating, and to fuel iron forges to craft weapons. But deforestation soon led
to the end of wood supplies, and the cold climate would freeze the peat bogs,
limiting their use as fuel.

Beyond its peat
supplies, Iceland has virtually no indigenous fossil fuel resources. As the
Industrial Revolution gathered momentum, the nation began to import coal and
coke for heating purposes; coal would remain the primary heating source until
the development of geothermal energy. In the late 1800s, as petroleum emerged
as a fuel, Iceland turned to importing oil. Today, imported oil-about 850,000
tons per year-accounts for 29 percent of national energy use, 57 percent of
this used to run its motor vehicles and the boats of its relatively large
fishing industry, the nation's leading source of exports (see figure, page 20).
Dependence on oil imports costs the nation $150 million annually, and explains
why transport and fishing each account for one-third of its carbon emissions.

The final third of
Iceland's greenhouse emissions is found in other industries-primarily the pro­duction,
or smelting, of metals like aluminum. The availability of low-cost
electricity-at $.02 per kilowatt it is the world's cheapest-has made Iceland a
welcome haven for these energy-intensive industries. Metals production, along
with transport and fishing, makes the island one of the world's top per-capita
emitters of carbon dioxide, and offsets much of the greenhouse gas savings
Iceland has achieved in space heating and electricity.

These features of
Iceland's energy economy-a carbon-free power sector, costly de­pen­dence on oil
for fishing and transportation, rising emissions from the metals industry-have
placed the nation in a difficult situation with regard to complying with
international climate change commitments. The 1997 Kyoto Protocol's guidelines
for reducing greenhouse gas emissions in industrial nations are based on
emission levels from the year 1990, which prevents Iceland from taking credit
for its previously completed transition to greenhouse gas-free space heating
and electricity generation. Although the government, arguing its special
situation, negotiated a 10 percent reprieve between 1990 and 2010 under the
Protocol, officials estimate that plans to build new aluminum smelters will
cause it to exceed this target. Because of this so-called "Kyoto dilemma,"
Iceland is among only a few remaining industrial nations that have not signed
the agreement.

In 1997, as the
Protocol talks gathered momentum and the nation's dilemma was becoming
apparent, a recently elected Parliamentarian named Hjalmar Árnason submitted a
resolution to the Par­lia­­ment, or Althing, demanding that the government
begin to explore its energy alternatives. Árnason, a former elementary-school
teacher who says he was "raised by an environmental extremist" father (he is
not related to the scientist Bragi Árnason), soon found himself chairing a
government committee on alternative energy, which was commissioned to submit a
report. One of the first people he tapped for the committee was Professor
Hydrogen.

Science Meets
Politics

Bragi Árnason began
studying Iceland's geo­thermal resource "as a hobby," he tells me, while a
graduate student pursuing doctoral research in the 1970s. His deep knowledge of
the island's circulatory system of hot water flows enables him to explain, for
example, why the water you shower with in Reykjavík probably last fell as rain
back in 1000 a.d. As he came to
grasp the size of the resource, he began to consider ways in which this
untapped potential might be used. At the time, the climbing cost of oil imports
was beginning to hit the fishing fleet, prompting discussion of alternative
fuels-including hydrogen.

Iceland has been
producing hydrogen since 1958, when it opened a state fertilizer plant on the
outskirts of Reykjavík under the post-war Marshall Plan. The production process
uses hydro-generated electricity to split water into hydrogen and oxygen
molecules-a process called electrolysis (see diagram, page 18). The fertilizer
plant uses about 13 megawatts of power annually to produce about 2,000 tons of
liquid hydrogen, which is then used to make ammonia for the fertilizer
industry. In 1980, Bragi Árnason and colleagues completed a lengthy study on
the cost of electrolyzing much larger amounts of hydrogen, using not only
hydroelectricity but geo­thermal steam as well-which can speed up what is a very
high-temperature process. Their paper found that this approach would be cheaper
than importing hydrogen or making it by conventional electrolysis, but it did
not find a receptive audience as oil prices plummeted during the 1980s.

The early 1990s saw
a reemergence of Icelandic interest in producing hydrogen, both for powering
the fishing fleet and for export as a fuel to the European market. In a 1993
paper, Dr. Árnason argued that a transition in fuels from oil to hydrogen may
be "a feasible future option for Iceland and a testing ground for changing fuel
technology." He also contended that the country could benefit from using
hydrogen sooner than other countries. Some of his reasons included Iceland's
small population and high levels of technology; its abundance of hydropower and
geothermal energy; and its absence of fossil fuel supplies. Another was the
relatively simple infrastructural change involved in converting the fishing
fleet from oil to hydrogen, by locating small production plants in major harbor
areas and adapting the boats for liquid hydrogen.

Early on, the plan
was to use liquid hydrogen to fuel the boats' existing internal combustion
engines. But "then came the fuel cell revolution," as Dr. Árnason puts it. By
the late 1990s, the fuel cell, an electrochemical device that combines hydrogen
and oxygen to produce electricity and water, had achieved dramatic cost
reductions over the previous two decades. The technology had become the focus
of engineers aiming to make fuel cells a viable replacement not only for the
internal combustion engine, but for batteries in portable electronics and for
power plants as well. Demonstrations of fuel cell-powered buses in Vancouver
and Chicago, and their growing use in hundreds of locations in the United States,
Europe, and Japan, caught the attention of governments and major automobile
manufacturers. The fuel cell was increasingly viewed as the "enabling
technology" for a hydrogen economy.

One Icelander
particularly taken with these _developments was a young man named Jón Björn
Skúlason, who while attending the University of British Columbia in Vancouver
became familiar with Ballard Power Systems, a leading fuel cell manufacturer
headquartered just outside the city. Upon returning home, Skúlason encouraged the
politician Hjalmar Árnason in his promotion of energy alternatives and
hydrogen; his enthusiasm earned him a position on the expert committee. In
1998, the panel formally recommended that the nation consider converting fully
to a hydrogen economy within 30 years.

By then, Hjalmar
Árnason had already given the process a push. During a phone interview with a
reporter from the Economist, he
floated the year 2030 as a target date for the government's evolving hydrogen
plans. The resulting article, published in August 1997, created a buzz abroad,
and the parliamentarian received hundreds of phone calls from around the world.
That fall, Iceland's prime minister released a statement announcing that the
government was officially moving the country toward a hydrogen economy. The
ministers of energy and industry, commerce, and environment signed on, as well
as both sides of the two-party Althing. And Árnason obtained permission to
start negotiating with interested members of industry.

A Piece of the
Action

Iceland has a
tradition of "stock companies," or business cooperatives that evolved in the
eighteenth century to help domestic farmers and fishers compete with the
formidable Danish trading companies that at the time controlled fishing and
goods manufacturing. The first of these, granted royal support in 1752, brought
in weavers from Germany, farmers from Norway, and other overseas experts to
teach the Icelanders the best methods of agriculture, boat-building, and the
manufacture of woolen goods. Over the years, these long-lasting business
associations helped the nation's enterprises survive and sometimes thrive.

The formation of
the Icelandic Hydrogen and Fuel Cell Company (now Icelandic New Energy) can be
seen as the latest example of this stock company tradition-but with a
contemporary twist: German carmakers instead of weavers, Norwegian power
companies rather than farmers. The first to contact Hjalmar Árnason after
publication of the Economist article
was DaimlerChrysler. Its roots traceable back to Otto Benz, designer of the
first internal-combustion engine car, DaimlerChrysler now aspires to be the
first maker of fuel cell-powered cars. The firm has entered into a $800 million
partnership with Ballard Power Systems and Ford to produce fuel-cell cars, and
plans to have the first buses and cars on European roads in 2002 and 2004,
respectively-making Iceland a potentially valuable training ground, especially
for testing fuel cell vehicles in a cold climate.

The second company
to touch base with the Iceland government was Royal Dutch Shell, the
Netherlands-based energy company that, among those now in the oil business, has
perhaps the most advanced post-petroleum plans. Birthplace of the "scenario
planning" technique that prepared it for the oil shocks of the 1970s better
than most businesses, Shell has posited an Iceland-like future for the rest of
the world, with 50 percent of energy coming from renewable sources by 2050. The
firm surprised its colleagues in mid-1998 by creating a formal Shell Hydrogen
division, and then sending its representatives to the World Hydrogen Energy
Conference in Buenos Aires.

The third group to
establish communications with island officials was Norsk Hydro, a Norwegian
energy and industry conglomerate. The company is involved in a trial run of a
hydrogen fuel cell bus in Oslo, and has considerable experience in hydrogen
production: it has its own fertilizer business, and Norsk Hydro electrolyzers
run Iceland's hydrogen-producing fertilizer plant. Norsk Hydro is also involved
in the politically sensitive issue of Iceland's planned aluminum smelters,
having signed commitments with the national power company and the ministries of
energy and industry and commerce to construct a new smelter on the island's
east coast.

Negotiations among
these companies and the Icelandic government culminated in February 1999 with
the creation of the Icelandic Hydrogen and Fuel Cell Company.

Shell,
DaimlerChrysler, and Norsk Hydro each hold shares of the company. The majority
partner, Vistorka, (which means "eco-energy"), is a holding company owned by a
diverse array of Icelandic institutions and enterprises: the New Business
Venture Fund, the University of Iceland, the National Fertilizer Plant, the
Reykjanes Geothermal Power Plant, the Icelandic Technological Institute, and
the Reykjavík Municipal Power Company. Also indirectly involved with the
holding company is the Reykjavík City-Bus Company.

The stated purpose
of the new joint venture is to "investigate the potential for replacing the use
of fossil fuels in Iceland with hydrogen and creating the world's first
hydrogen economy." On the day of its announcement, Iceland's environment
minister stated: "The Government of Iceland welcomes the establishment of this
company by these parties and considers that the choice of location for this
project is an acknowledgement of Iceland's distinctive status and long-term
potential." Like the Economist
article, the announcement attracted industry attention. But for some companies,
it was too late to climb on the bandwagon. Toyota officials reportedly
attempted, to no avail, to take over the project by offering to foot its entire
bill and supply all the needed engineers.

Buses, Cars, and
Boats

Bragi
Árnason and a colleague, Thorsteinn Sigfússon, have outlined a gradual, five-phase
scenario for the hydrogen transformation. (See timeline.) In phase one (an
estimated $8 million project that has received $1 million from the government),
hydrogen fuel cells are to be demonstrated in Reykjavík's 100 municipal public
transit buses. The current plan is to have three buses on the streets by 2002.
The fertilizer plant will serve as the filling station for the buses, its
hydrogen pressurized as a gas and stored on the roofs of the vehicles. Because
enough hydrogen can be stored onboard to run a bus for 250 kilometers, the
average daily distance traveled by a Reykjavík bus, there is no need for a
complicated infrastructure for distributing the fuel.

In
phase two, the entire city bus fleet-and possibly those in other parts of the
island-will be replaced by fuel cell buses. The Reykjavík bus fleet program has
a price tag estimated at $50 million, and this spring received $3.5 million
from the European Com­munity. Phase three involves the introduction of private
fuel cell passenger cars-which requires a more complicated infra­structure. At
present, storing pressurized hydrogen gas on­board a large number of smaller
vehicles, with more geographically dispersed refueling requirements, is too
expensive to be considered a realistic option. The first fuel cell cars are
therefore expected to run not on hydrogen directly, but rather on liquid
methanol-which contains bound hydrogen but must be reformed, or heated, onboard
the vehicle to produce the hydrogen to power the fuel cell.

Methanol
is also, at the moment, the preferred fuel for the final two phases: the
testing of a fuel cell-powered fishing vessel, followed by the replacement of
the entire boating fleet. These trawlers use electric motors that are in the
range of one to two megawatts-larger than those for cars and buses, but close
to the size of the fuel cells that are now starting to be commercialized for
stationary use in homes and buildings. Several European vessel manufacturers
have already expressed their interest in becoming involved in this phase, and
Dr. Árnason would like to see a fuel cell boat demonstrated no later than 2006.

But
using methanol as an intermediate step to hydrogen is not without its problems.
Skúlason, who is now president of Icelandic New Energy, notes that Shell is
concerned about the use of methanol, particularly its toxicity. And since
methanol reforming releases carbon dioxide, the environmental benefit is much
less than if a way can be found to store the direct hydrogen onboard, which in
Iceland's case would mean complete elimination of greenhouse gas emissions.
It's a difficult decision, notes Skúlason: "We must deal with the technologies
we are given by the global companies."

Iceland
will have to choose between two options: producing and distributing pure
hydrogen and storing it onboard vehicles (the "direct hydrogen" option); or
producing hydrogen onboard vehicles from other fuels-natural gas, methanol,
ethanol, or gasoline-using a reformer (the "onboard reformer" option). In
general, the automobile industry strongly favors the onboard option, using
methanol and gasoline, because most existing service stations already handle
these fuels. A third path, reforming natural gas at hydrogen refueling
stations, is under consideration in countries like the United States, that
already have an extensive natural gas network, but is not practical in Iceland.

The
up-front costs of direct hydrogen will be high because such a change requires a
new infrastructure for transporting hydrogen, handling it at fueling stations,
and storing the fuel onboard as a compressed gas or liquid. According to
DaimlerChrysler's Ferdinand Panik, retrofitting 30 percent of service stations
in the U.S. states of New York, Massa­chusetts, and California for methanol
distribution would cost about $400 million. Supplying hydrogen to these
stations would cost about $1.4 billion.

But
in terms of long-term societal benefits, direct hydrogen is the clear winner.
Using hydrogen directly is more efficient, because of the extra weight of the
processor and lower hydrogen content of the methanol or gasoline. It is also
less complex than having a reformer onboard each vehicle-which adds $1,500 to
the cost of a new car, takes time to warm up, and creates maintenance problems.
As the vehicle population grows large enough to cover the capital costs of
providing refueling facilities, the costs of direct hydrogen will become
comparable to the onboard option. Once the infrastructure and vehicles are put
in place, using hydrogen fuel will be more cost-effective than having cars with
reformers-even excluding the environmental gains.

If
Iceland, with its heavy renewable energy reliance, were to switch directly to
hydrogen, the country would have no greenhouse emissions. And in fact, it is
much easier to produce hydrogen than methanol from renewable energy through
electrolysis. Thus, as renewables become more prominent around the world, a
hydrogen infrastructure will emerge as the most practical option. In Iceland,
rather than require that hydrogen first be used to _create, and then be
reformed from, methanol, the simplest approach would be to use geothermal power
and hydropower, augmented by geothermal steam, to electrolyze water, creating
pure hydrogen to _drive cars and boats. But behind the seeming solidarity of
the public/private venture, a fateful struggle may be emerging.

A Fork in the Road

In
spite of the long-term economic and environmental advantages of the direct
hydrogen approach, industry and government-both in Iceland and worldwide-have
devoted substantially greater attention and financial support to the inter­mediate
approach of using methanol and onboard reformers. Car companies are hesitant to
mass-produce a car that cannot be easily refueled at many locations. Energy com­-panies,
similarly, are loathe to invest in pipe­lines and fuel stations for vehicles
that have yet to hit the market. This is a classic case of what some engineers
call the chicken-and-egg dilemma of creating a fueling infrastructure. But the
potential public benefits-especially for addressing climate change-give
governments around the world incentive to steer the private sector toward the
optimal long-term solution of a hydrogen infrastructure, by supporting
additional research into hydrogen storage and by collaborating with industry.

In
Iceland's case, producing pure hydrogen through electrolysis by hydropower is
at the moment three times as expensive as importing gasoline. But the fuel
cells now being readied for the transportation market are three times as
efficient as an internal combustion engine. In other words, running the
island's transport and fishing sectors off pure hydrogen from hydropower is
becoming economically competitive with operating conventional gasoline-run cars
and diesel-run boats.

Since
the methanol reformers these fuel cells _will presumable use are still several
years away from mass production, some scientists see the next few years as an
important window of opportunity to prove the viability of direct hydrogen
technology. But the history of technology is littered with examples of
_inferior technologies "locking out" rivals: witness VHS versus Beta in the
video­cassette re­corder market. If methanol does gain market dominance, and
locks out the direct hydrogen approach, it may be decades before real hydro­gen
cars be­come widespread-a wrong turn that could take the Icelandic venture
kilometers from its destination. By the time a full-blown methanol
infrastructure were put in place, it would probably no longer be the preferred
fuel-committing the country to a fleet of obsolete cars and causing the
consortium to strand millions of kroner in financial assets.

Yet
some outside developments are pointing in the direction of direct hydrogen. In
California, where legislation requires that 10 percent of new cars sold in 2003
must produce "zero-emissions," a consortium called the Cali­fornia Fuel Cell
Part­nership is planning to test out 50 fuel cell vehicles and build two
hydrogen fueling stations that will pump hydrogen gas »into onboard fuel tanks.
Hydro­gen fueling stations have already been built in Sacramento (California's
capital), Dearborn, Michigan (home to Ford headquarters), and the airport at
Frankfurt, Germany-the last of which expects to eventually import hydrogen from
Iceland. The prospect of Iceland becoming a major hydrogen exporter, perhaps
the new energy era's "Kuwait of the North," surfaces several times during my
interviews-and is no doubt a good selling point for the strategy to officials
inclined to think more in narrow economic terms.

Skúlason
assures me that there is a "very open discussion" underway within the
consortium, and says "we have to take steps slowly because there might be a
shift." He admits that he would prefer to see compressed hydrogen gas used,
noting the advantages of having direct hydrogen fuel infrastructure and
vehicles. Shell and DaimlerChrysler themselves seem to recognize the potential
competitive advantage of putting up hydrogen filling stations and reformer-free
cars right from the beginning, giving them a headstart in preparing for a world
fueled by hydrogen. At a June 2000 conference in Washington, DC, Shell Hydrogen
CEO Don Huberts asserted that direct hydrogen was the best fuel for fuel cells,
and suggested that geothermal energy converted to hydrogen would be the main
means for converting the Icelandic economy. DaimlerChrysler representatives
have admitted that their methanol reformers are relatively expensive and
large-they take up the entire back seat-and the company has recently rolled out
"next generation" prototype cars that run on liquid and compressed
hydrogen-prime candidates for the Iceland strategy.

"The
transition is messy," the politician Hjalmar Árnason tells me. "We have one leg
in the old world, and one in the new." It's an apt metaphor, given Iceland's
geography. But the question is whether the Icelandic venture will, in rather
un-Viking fashion, cautiously creep ahead-sticking to the onboard methanol
approach-or, brashly set both feet in the new world, voyaging straight to
direct hydrogen. As a world leader in utilizing renewable energy sources, if
Iceland does not take the "newest" path, governments and businesses elsewhere
may extract the wrong conclusion from its experiment and give short shrift to
the direct hydrogen option. Skúlason nails the conundrum: "How many times will
we shift? Will it be cheaper for society to pay a little more now and not have
to rebuild? This argument doesn't always work with government or the consumer."

Professor
Árnason is quick to note that, which­ever short-term infrastructural path the
country takes, "the final destination is the same:" pure hydrogen, derived from
renewable energy and used directly in fuel cells. But he acknowledges that
there may be significant costs in taking the gradual approach. And he agrees
that the assumption on which his scenario is based-that methanol is the most
economical option-is "subject to revision." The cost and efficiency of fuel
cells will continue to improve, and advances in carbon nanotubes, metal
hydrides, and other storage technologies are making it more feasible to store
hydrogen onboard. The high cost of electrolysis is likely to decline sharply
with technical improvements, while other sources of hydrogen-tapping solar,
wind, and tidal power, splitting water with direct sunlight, playing with the
metabolism of photosynthetic algae-are on the horizon. And new climate policies
or fluctuating fuel prices from volatile oil markets "would change the whole
picture."

Why Iceland?

When
he first met with his prospective joint venture partners, Bragi Árnason posed this
query: "Why are you interested in coming to Iceland?" He asked the question
because "we were quite surprised to learn about the strong interest of these
companies in participating in a joint venture with little Iceland." Their
answers shed light on some of the elements that may be useful for developing a
hydrogen economy elsewhere in the world.

Without
a doubt, the most critical element of getting the Iceland experiment underway
has been the government's clearly stated commitment to transforming itself into
a hydrogen economy within a set timeframe. A similar dynamic is at work in
California, where the zero-emission mandate has forced energy and transport
companies to join forces with the public sector to seriously explore hydrogen.
For Dr. Árnason, the lesson is clear: a strong public commitment can attract
and encourage the participation of private sector leaders, resulting in
partnerships that provide the financial and technical support needed to move
toward environmental solutions. "You must have the politicians," he says.

In
addition, companies have shown interest in the Iceland experiment because the
results will be applicable around the world. While the country's hydrogen can
be produced completely by renewable energy, its car and bus system and heavy
reliance on petroleum-amplified by its island setting-are common
characteristics of industrial nations, making the result somewhat adaptable.
The island's head start in transitioning to renewable energy also makes it a
good place to test out this larger shift.

Iceland
may also have something more to tell us about the more general cultural
building blocks that can enable the evolution of a hydrogen society. Icelanders
treasure their hard-won independence, and the prospect of energy self-reliance
is attractive. Hjalmar Árnason likes to emphasize his homeland's "free, open
society," which he believes has maintained a political process more conducive
to bold proposals and less subject to special-interest influence and partisan
gridlock. He points, too, to the country's openness to new technology-to its
willingness to take part in international scientific endeavors such as global
research in human genetics. He hopes Iceland will become a training ground for
hydrogen scientists from around the world, cooperating internationally to
convert its NATO base to hydrogen. Skúlason cites a poll of Reykjavík citizens
indicating that 60 percent of the citizens were familiar with and supportive of
the hydrogen strategy-though some ask about the safety of the fuel (it is as safe
as gasoline), pointing to the need for public education campaigns before people
will be persuaded to buy fuel cell cars.

Another
important cultural factor has been what Arni Finnsson, of the Icelandic Nature
Conser­vation, describes as his nation's relatively recent but increasing
"encounter with the globalization of environmental issues." This encounter
originated with the emotional whaling disputes of the 1970s and 80s, and today
includes debates about persistent organic pollutants and climate change. As
Icelanders seek to become more a part of global society, so too do they seek
legitimacy on global issues, forcing their government to sensitize itself to
emerging cross-border debates-a process that has sometimes created Iceland's
political equivalent of volcanic eruptions.

Finnsson
points out that, thanks to the "Kyoto dilemma," Icelandic climate policy is not
terribly progressive, consisting mainly of efforts to create loopholes that
would allow additional greenhouse gas emissions from its new aluminum smelters.
But there is little doubt that this dilemma has also unwittingly helped
encourage the hydrogen strategy, by forcing the nation to explore deep changes
in its energy system. In a land that, even as it becomes wired to the
information age, routinely blocks new road projects due to age-old
superstitions of upsetting elves and other "hidden people," it's a
contradiction that somehow seems appropriate. A country that has stubbornly
refused to sign the Kyoto Protocol provides the most compelling evidence to
date that climate change concerns-and commitments-will increasingly drive the
great hydrogen transformation.

But
my favorite, if least provable, theory for "Why Iceland?" comes from the heroic
ideals of its sagas. One of the recurring themes of these remarkable literary
works is that a person's true value lies in renown after death, in becoming a
force in the lives of later generations through one's deeds. Listening to Bragi
Árnason, who is now 65, one cannot help but wonder whether this cultural concern
for renown is playing a part in the saga now unfolding: how Iceland became the
world's first hydrogen society, inspiring the rest of the globe to follow its
lead. "Many people ask me how soon this will happen. I tell them, ‘We are
living at the beginning of the transition. You will see the end of it. And your
children, they will live in this world.'"

Seth Dunn is a
research associate at the Worldwatch Institute. He is the author of Worldwatch
Paper 151, Micropower: The Next
Electrical Era.